Altria earnings edge higher, despite bigger tax bill
LINDY KEAST RODMAN/TIMES-DISPATCH
The parent company of Philip Morris USA reported that quarterly cigarette sales declined compared to 2008, but revenue went up.
Altria Group Inc.‘s profit edged higher in the third quarter despite a doubling in the federal excise taxes it paid on its tobacco products.
An 8.8 percent, or nearly $200 million, drop in the cost of making its cigarettes, cigars and smokeless tobacco boosted the Henrico County-based company’s bottom line.
Altria reported earnings for the third quarter rose slightly to $882 million from $867 million a year ago, or 43 cents a share from 42 cents. Revenue rose by $1.06 billion to $6.3 billion.
The nation’s No.1 maker of cigarettes and smokeless tobacco reported that its flagship Marlboro brand reversed a monthslong slide in its market share, gaining 0.1 percentage points from last year to capture 41.9 percent of the market.
Altria, parent of Philip Morris USA, said quarterly cigarette sales declined 16.4 percent, to 37.5 billion cigarettes, compared to the 2008 period. Revenue from cigarettes rose 11 percent, or by $542 million, to $5.63 billion.
But that increase was more than offset by the $1.02 billion increase in federal excise taxes the company had to pay. The 61.66 cent-a-pack increase that took effect in April year brought federal taxes on cigarettes to just over $1 a pack.
Cost-cutting, though, eased the impact. Philip Morris USA’s operating income slipped only 2.6 percent to $1.33 billion.
Altria’s smokeless tobacco sales declined 4.5 percent, to 158 million cans or packs, from last year’s level, while its Copenhagen brand’s market share edged 0.3 percentage points higher to 23.3 percent, while Skoal’s share slipped by 0.3 percentage points to 23.6 percent.
The company’s cigar operation’s revenue rose 56.1 percent, or $55 million, to $153 million for the quarter. That was larger than the $40 million increase in excise taxes it paid, learning its operating income up 32 percent to $49 million. Sales rose 3.9 percent to 341 million cigars.
The Henrico County-based company’s latest view on its likely earnings for the year is that they will come in on the higher end of the range it gave earlier, or somewhere between $1.53 to $1.56 per diluted share for continuing operations.
For the first nine months of the year, its earnings from continuing rose to $1.19 per diluted share from $1.15, reflecting an increase in earnings from continuing operations to $2.48 billion from $2.41 billion. Revenue for the nine month was up 19.3 percent to $17.54 billion. Diluted per share earnings reflects the effect of securities that can potentially be converted in shares of stock.
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Reader Reactions
Give these guys a break. No one pays more in taxes local, state, and federal than PMUSA. In spite of Kaine’s destructive actions, this company continues to be the best corporate citizen in our area supporting more causes than most companies could only dream of. The Government is their largest benefactor. Just say Thank You and move on.
Made in the USA has been removed from the packs. They are not staying in Richmond either. I like how they used PM-USA to build this empire then use the empire to shut down PM-USA. They will have to answer for their deeds, somehow, someday. I would not want to have to answer for the things they are doing. What goes around, comes around.
Interesting point, “oneuser”. Philip Morris USA only makes cigarettes for the American market. The rest of the world is serviced by Philip Morris International - a separate entity no longer under the Altria umbrella. In fact, since the split last years, PMI can be viewed as a competitor. Given Americans are smoking less and less - a four or five percent annual decline - and cost of producing cigarettes in America goes up that much annually, it’s probably simply a matter of time before the larger Philip Morris International eats PMUSA for dinner. After all, wouldn’t it be more cost-effective to sell cigarettes made in the Philippines by workers who make three hundred dollars A YEAR?
oneuser… Made in the USA IS important, isn’t it?
Philip Morris USA has to bid on cigarette orders from Altria. If there is another factory that can make them for less then that is the one who gets the bid. With this “Global” economy Americans cannot compete. Only positive thing is American smokers STILL look for the made in USA on the packs they buy as do the Japanese.
How can anybody spin this news as positive is beyond me. This company needs new management. They are doing everything they can to cut their own throat. They wonder why productivity and moral is at the lowest point ever, all they have to do is look in the mirror. The ones that MADE the company what it was aren’t the ones running it today. They have the Times bought out as well as the politicians in VA. Move all the production to the NC plant just to close it down and move it back here just seems like poor planning on their part. They throw away MILLIONS everyday, but seem to think that their employees are the ones that should continue to pay the price for their lousy management.
“Altria, parent of Philip Morris USA, said quarterly cigarette sales declined 16.4 percent, to 37.5 billion cigarettes, compared to the 2008 period. “
Philip Morris is doing the same thing that every other factory has done. They have shifted their production out of the USA. The FREE TRADE AGREEMENT has made it unfairly profitable for companies to move away. Unless someone looks at the Free Trade Agreement the country will not recover it’s economy and more factories will close.
The percentages noted in the comment above did not transfer properly. The R&D budget was reduced by forty percent; R&D head count was reduced by almost fifty percent.
You go, Observer! The lay-offs continue, and the big bosses just keep on congratulating one another and promoting one another. Whatever good PMUSA/Altria ever brought to the Richmond area is quickly being thrown down the rabbit hole. They’re not good businessmen; they’re greedy men who have the power to destroy the economy of our area.
I wonder exactly how much influence Altria senior management has over our local media outlets. There seems to be a near blackout of Altria news - unless it can be spun as “good”. I noticed the article didn’t mention that the R&D budget was cut by @, resulting in a lay-offs of nearly P of R&D this past February. And more cuts are looming - employees have already been notified that more cuts are expected next month, with affected workers being let go in mid-December. Seems rather odd that after spending $375 million to build the new Center for Research & Technology (CRT) downtown, the building no longer serves the need for which it was built, and research has been halted on developing reduced-harm and alternative products. The cavernous building is nothing more than a monument to corporate image, a polished-steel veneer which cloaks the emptiness inside. But, isn’t it nice to have it in Richmond?
This on the heels of the closing of the sister facility in Cabarrus, NC. In 2005, Altria spent over $200 million dollars to renovate the North Carolina facility, complete with installation of a robotic inventory system - only to announce in 2007 that business had slowed to the point where they would have to close the facility. Interestingly, the Times Dispatch ran an article last year on what a wonderful thing it would be for Richmond to get the additional manufacturing business. Those few factory workers that relocated to Richmond after the closure of the North Carolina facility faced layoffs within a year of uprooting their families in order to follow their job to Richmond’s greener pastures. Isn’t it nice to have them in Richmond?
Altria has wasted a stunning amount of money - over half a BILLION dollars - in just a few years. The company’s senior management team blames everyone but themselves, yet they haven’t applied their “head count reduction” strategy to their own ranks. In 2007, the median household income of the average Joe in the US was about $45,000 a year. Mike Szymanczyk, Chairman and CEO, drew a $24 million dollar annual salary. That would more than pay for an annual payroll of 533 “average Joes”. Or, put another way, the average Joe would have to work full time for over 533 years to be able to accumulate what Szymanczyk makes in ONE year. Frankly, that’s an amazing amount of money to pay for the short-sighted, debilitating, and reckless decisions the company has made recently. But, isn’t it nice Altria’s in Richmond?
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